Looking to invest £1,000? Here are two investment trusts I'd consider
With stock markets having been volatile in recent months, now may not seem like a particularly good time to invest. After all, there is a good chance that recent volatility will continue. This could mean falling share prices, which may translate into paper losses for investors.
However, in the long run such times can be the best periods in which to invest. It may be possible to obtain better value shares than usual, since most investors may be selling as opposed to buying.
With that in mind, here are two investment trusts that appear to offer good value for money. They could generate high total returns in the long run and may therefore be worth a closer look.
Reporting on Tuesday was Manchester & London Investment Trust(LSE: MNL). The first half of its financial year saw a total return to shareholders of 13.5%. This was significantly higher than the increase in its benchmark of 4.7%, with sector positioning driving its outperformance of 8.8%.
Technology investments contributed a 14.8% return, while consumer investments delivered 5.2% of total returns. The former was boosted by exposure to technology majors, with the industry enjoying generally positive performance as investor sentiment has remained buoyant. And with around 88% of its consumer investments return being driven by the company's holding of Amazon shares, the trust has enjoyed significant success during the period when it comes to sector positioning.
Looking ahead, Manchester & London notes the recent volatility in global markets. However, with it having a strong track record versus its benchmark and trading at a 4% discount to net asset value (NAV), it seems to offer a worthwhile risk/reward ratio for the long term.
Also offering impressive long-term growth prospects is the Schroder UK Growth(LSE: SDU) investment trust. The company has experienced a period of underperformance versus the UK All Companies benchmark, with its rise of 1.6% in the last year representing an underperformance of 3.7%. However, the company is invested in a number of stocks which could offer strong growth after challenging periods.
For example, the five biggest holdings of the trust are Shell, Standard Chartered, BP, Tesco and Lloyds. All five companies have experienced difficulties in recent years, but now appear to offer good value for money as well as clear turnaround potential. Therefore, they could provide a strong catalyst when it comes to the future performance of the trust - especially since they make up around 31% of the total portfolio.
Since the Schroder UK Growth investment trust currently trades at a discount to its NAV of around 11%, it appears to offer a wide margin of safety. While potentially volatile in the near term as stock markets could experience further disruption, in the long run it could deliver impressive total returns. With a dividend yield of 3.4%, it may also offer an inflation-beating income return over the medium term.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Peter Stephens owns shares of BP, Lloyds Banking Group, Royal Dutch Shell B, Standard Chartered, and Tesco. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended BP, Lloyds Banking Group, Royal Dutch Shell B, Standard Chartered, and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.